Euro zone inflation eases to 2.5%

Euro zone inflation eased as expected in October thanks to slower growth of energy prices, new data from the European statistics office shows.

Eurostat estimated consumer inflation in the 17 country euro zone was 2.5 per cent year-on-year, down from 2.6 per cent in September, though still above the European Central Bank target of below, but close to 2 per cent.

Upward pressure came mainly from more expensive energy, the prices of which increased 7.8 per cent year-on-year in October, but more slowly than in September, when they were up 9.1 per cent year-on-year.

The second biggest inflation contributor was food, which was up 3.2 per cent year-on-year, up from 2.9 per cent the month before.

Economists expect the European Central Bank to cut interest rates once more before the end of the year from the current record low of 0.75 per cent, to support the slowing economy which is likely to have sank into a recession in the third quarter.

Inflation pressures in the euro zone are low because unemployment is a record levels, rising to 11.6 per cent of the workforce in September - the highest level for the 17 countries that now make up the euro zone since 1995.